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Would Peter Lynch Buy Global Logistic Properties?

Peter Lynch is on the lookout for relatively-new, high-growth companies. Could Global Logistic Properties (SGX: MC0) fit the bill?

The property outfit is relatively young. It was only floated on the Singapore stock market four years ago. But does it have the growth credentials to attract Lynch?

Lynch is on the lookout for companies that are cheap relative to their growth potential. In other words he doesn’t mind too much if a share is expensive, provided that it is growing quickly. Over the last five years, GLP’s bottom-line profits have been flat. But it is still valued at almost 20 times historic profits.

Peter Lynch is also looking for companies whose debts are low relative to shareholder equity. In 2010 Total Debt was almost 1.5 times higher than shareholder equity. But over the years, debt has moderated significantly. Last year, Total Debt was only 20% of shareholder equity.

There is something else that Lynch wants to see, and that is Net Cash. Despite a cash pile of almost $2b, Global Logistic Properties has Total Debts of around S$4bn. So it, in fact, has Net Debt of nearly S$2b.

Whilst dividends are not paramount, Lynch believes that payouts should be adequate. GLP’s payout has risen steadily over the last three years, but it still only represents around 35% of net profits. With a Retention Ratio of 65% and a Return on Equity of 1.8%, the implied growth rate is a very modest 1%.

Global Logistic Property is an interesting property business, which could provide investors with exposure to China and Japan. But it is unlikely to interest a growth investor such as Peter Lynch.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.